My Supervisor has written this in respect of the statutory interest variation.
"I have had correspondence from the debtors to the effect that they wish to make an offer to creditors in full and final settlement of their Voluntary Arrangement.
The debtors’ IVA, as approved, provided for sixty monthly contributions commencing at £300 and rising as reviews allow; and a lump sum equity release amounting to 75% of the debtors’ equitable interest in their property. The debtors’ have sold their property, and subject to approval of the variation, are in a position to pay their creditors in full. In consideration of early settlement the debtors would like creditors to partially waive their right to statutory interest and accept the reduced sum of £59,730.00 in full and final settlement of the IVA.
In support of their request for variation, the debtors have pointed out that they will need to retain a proportion of their sale proceeds in order to pay a substantial rental deposit and prepayment, and to inject working capital into their business which has suffered from under-investment during the period in which they were in an IVA.
For this reason they propose that creditors limit their entitlement to statutory interest to £3,469.30. I have calculated that, should the IVA close on 30th June 2007, the sum entitlement would be nearer to £10,800 and the difference of approximately £7,300 being retained by the debtor for essential expenditure.
I enclose an outcome statement which compares what would be achieved if the Arrangement ran its course against what would be achieved if the proposed variation is approved. Creditors should note that the fourth anniversary of the Arrangement is in December 2007.
I enclose formal notice of a creditors’ meeting to consider the variation resolutions. I also enclose a proxy form and proof of debt and would ask that all creditors who have not already done so prove their debt as soon as possible. It is envisaged that, should the variation be accepted, dividends will be paid within sixty days of the sale proceeds being received. This is however subject to final proofs being received from all creditors entitled to prove."
I wrote this as my proposal to my creditors.
"The reasons for the variation are outlined as follows:-
1. There is some concern about the clause with regard to their being sufficient funds available. The circumstances and the amount we have obtained could not be a windfall in the true sense of the word and the charge made amounts to a 50% fall in the share of the equity.
Whilst I accept that my creditors have lost interest on the outstanding amount in the IVA it has to be pointed out that they have been paid in full. The original IVA would have only given them a dividend of 72p in the £. They have received more than that from the sale and I trust that they will accept the variation.
We will only have a small amount left in order to rebuild our lives as we have lost £7,000 in deposits for renting our property. Before the Clause 13.2 statutory interest notification came in we would have had a further £7,000.
2. For reasons outlined in (1), this will not be sufficient to replace a lot of items that we need such as new furniture which we were unable to purchase. The cost of this would come to a few thousand. We would not be able to obtain credit as our credit score is zero. Whilst we accept our responsibility for putting us in that position in the first place we do feel that we have made good amends to pay back what was owed.
3. There is a requirement to protect the business and sufficient working capital is needed in order to replace the car and computer equipment which my business requires. Again for the reasons explained in 2 it will be difficult for us to go to any lender.
4. We still have 2 children in full time education and the self employed income is varying and it is difficult to maintain a constant income stream. Given that there is a small downturn in the economy we do require some funds to support them.
5. As we have lost our home due to a number of reasons, it has resulted in us having to go to the rented sector, as advised by a number of letting agencies this will result in us having to place a six month deposit if we have to move again within the next few years. As we have only been offered an assured short hold tenancy agreement for a period of 12 months. The landlord has the right after 12 months to request us to leave. It is important that we have funds to make a six month deposit as the new rules for deposit monies states that deposits would be repaid after 10 days. This will therefore make it difficult for us to obtain sufficient funding for the family to maintain a home.
6. We do not have any savings for our retirement and we do not see any prospect of any major windfall or inheritance. Therefore we had planned to use the surplus to rebuild our savings. The only comfort is that we have over the last 4 years been able not to take any further debt and hopefully with a small amount to start with we might be able to start a savings plan so as to rebuild our lives.
Basically, our reaction over the last two weeks although harsh in your eyes is one of trying to protect something to cling on.
In saying that we do realise that our creditors are due to have something in recognition of them agreeing to make a variation to the IVA. I would like to propose a payment based on IVA balance of £52,215 less the contributions made into the IVA of £6,540 , which will be charged at the interest paid on an ordinary deposit account.of 3%. This will amount to £3,469.30.
We trust that this for the reasons stated as above will be acceptable for our Creditors to vary the IVA.
Please could you send us a draft of the IVA variation so that we can see it before being submitted."
Basically I am overreacting by thinking that my supervisor is weak and that mine has is to strong?
Any ideas would be greatly appreciated because I am very worried about this whole issue as I only feel that I have one good bite at the cherry!
I am also trying desperately to exchange contracts and it all feels the whole thing is falling to pieces given that we were supposed to complete on Friday!
Many Regards
Ray
